India's Index of Industrial Production (IIP) growth decelerated to 4.1% year-on-year in March, down from 5.2% in February, marking the slowest pace in five months, according to Societe Generale's Kunal Kundu [1]. The eight-core sector, which constitutes approximately 40% of the IIP, contracted by 0.4% year-on-year, its weakest performance in 19 months, primarily due to a significant 24.6% year-on-year decline in fertiliser output. Additionally, power output softened, indicating early signs of stress in the energy sector [1].
Despite these headwinds, manufacturing output grew by 4.3% year-on-year in March, and full-year FY26 manufacturing growth improved to about 5.0% compared to 4.1% in FY25, helping to offset weaknesses in other areas. Capital goods and infrastructure/construction goods outperformed staples, while consumer non-durables continued to show low growth, highlighting uneven demand conditions across sectors [1].
The report also notes that performance within manufacturing subsectors was mixed. Segments exposed to petrochemical inputs and logistics, such as chemicals, electronics, and PCB-linked materials, are particularly vulnerable as disruptions from ongoing geopolitical conflicts begin to impact supply chains. These effects are expected to have broader, second-round impacts, especially for micro, small, and medium enterprises (MSMEs), with a lagged transmission [1].
Overall, the data signals that while capital expenditure-linked categories are providing some support, weak consumer demand and sector-specific vulnerabilities could lead to softer industrial readings in the near term [1].
CONCLUSION
India's industrial production growth slowed in March, with uneven sector performance and emerging risks from geopolitical disruptions. While manufacturing and capex-linked categories provided some resilience, weak consumer non-durables and core sector contraction point to potential challenges ahead. Market participants may remain cautious given the mixed outlook and sector-specific vulnerabilities.